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Factoring
History

Welcome to factoring. Whether you own a business, look forward to
building one or are looking for new financial tools for your current
employer, Factoring can help
you reach your financial goals.

Factoring
has the ironic distinction of being the financial
backbone of many of America's
most successful businesess.
Why ironic? Because factoring is not taught in
businesscolleges, seldom mentioned in business plans and is
relatively
unknown to the majority of American business people, yet it is a financial
process that frees up billions of dollars every year, enabling thousands of
businesses
to grow and prosper.

Factoring is the process of purchasing
commercial
accounts receivable(invoices) from a business at a discount.
Business
practices today dictate that in order to get business
you, as a provider of
goods and services, must
extend terms to your customers.

These terms can
squeeze the life(and cash is the
lifeblood of any business) out of a new or
struggling company.

Factoring has a long and rich tradition, dating back
4,000 years to the days of Hammurabi.
Hammurabi was the king of Mesopotamia,
which gets credit as the "cradle of civilization."
In addition to many other
things, the Mesopotamians
first developed writing, put structure into business
code and government regulation, and came up with
the concept of
factoring.

After a while, Hammurabi and the Mesopotamians went
the way of
extinct civilizations, but factoring endured.
Almost every civilization that
valued commerce
has practiced some form of factoring, including the
Romans who
were the first to sell actual promissory
note at a discount.

The first
widespread, documented use of factoring occurred
in the American colonies before
the revolution.
During this time, cotton, furs and timber were
shipped from the
colonies. Merchant bankers in London
and other parts of Europe advanced funds to
the colonists
for these raw materials, before they reached the continent.
This
enabled the colonists to continue to harvest their
new land, free from the
burden of waiting to be paid by
their European customers.

Recognize that
these were not banking relationships
as they exist today. If the colonists had
been forced to
use modern banking services in eighteenth century England,
the
process would have been much slower. The banks
would have waited to collect from
the European buyers
of the raw materials before paying the seller of these
goods, the colonists. (And at that point, who needed the bank?)
This was not
practical for anyone involved.
So, just as today, the "factors" of colonial
times
made advances against the accounts receivable of clients,
enabling the
clients to continue with their operations,
long before they had been paid for
what they were sold.

With the advent of the Industrial Revolution,
factoring
became more focused on the issue of credit,
although the basic premise
remained the same.
By assisting clients in determining the
creditworthiness of
their customers and
setting credit limits, factors could actually
guarantee
payment for approved customers.

This is known as factoring without
recourse(or non-recourse factoring)and is
quite common in business
today.

Prior to the 1930's, factoring in this country
occurred primarily
in the textile and garment industries,
as the industries were direct descendants
of the
colonial economy that used factoring so
specifically. after the war
years, factors saw
the potential to bring factoring to other forms
of
invoice-based business and the expansion began.

Today, factors exist in
all shapes and sizes:
as divisions of large financial institutions or,
inlarger
numbers, as individually owned and
operated entreprenurial
endeavors.

Many of these private factors sprung up in
record numbers as
interest rates rose to
new heights in the 60's and 70's. This trend
intensified
in the 80's, primarily due to the
increasing impact of interest rates and
changes in the banking industry. With banks
becoming too expensive and too
inflexible due
to heavy regulation(remember the Savings and Loan crisis?),
the
small businessperson was forced to find other
sources of financing for expansion
and growth.
As more and more banks stop befriending the
small bussinesperson,
factoring is becoming
an increasingy popular option.

This year alone
thousands of businesses will sell
billions of dollars in accounts receivable,
and they
are doing it for profit, growth, and in some cases , their very
survival.

We Can Offer You
What Others Can't

Unlike other factoring
companies, our program includes the following features at no additional
charge: • 24 hour funding on approved invoices•
Highest advance rates in the industry• Credit analysis on new and existing
customers• Continuous collection management and follow up on factored
invoices• Invoice and statement mailing (postage included)• Account
status inquiries anytime; 24/7 online account access.• We allow you to electronically
submit Invoices• Free credit checking on new customers at no additional
cost

Also • Personalized Service - you have one dedicated
person and his or her assistant who handle your account. You don't have
to start over each time you call with a new person• We are seasoned
professionals with an average of 11 years industry experience per
account executive (Well above the factoring industry
norm)

Our flexibility allows you to maintain control:• You select accounts you prefer to factor on an
invoice by invoice basis.• You control total factoring costs by only
factoring on an "as needed" basis. Up to 97% Advance Rates:Advance rates are based on overall risk
associated with a particular industry as well as experience and track record. We
hold reserve accounts to accommodate industries which typically experience
dilution and that we would otherwise not be able to service. Advance rates range
from 80% to 97% of the gross invoice amount.